In spite of the significant expansion in the cocoa sector, Renaissance Capital says growth in the agriculture sector has declined.

In its August Macro-Economic Update, analyst Yvonne Mhango explained that agriculture grew by a weak 0.8 per cent in 2011 and contracted by 2.9 per cent year on year in first quarter of 2012, compared to growth of 5.3 per cent in 2010 and zero growth in first quarter of 2011.

“We struggle to understand how agriculture declined in first quarter of 2012 when the sub-sectors that represent 95 per cent of its production recorded growth. Nevertheless, the agriculture growth numbers suggest weakness.”

Renaissance Capital noted that in the four sub-sectors it was only the fishing sector that declined but crops production, which makes up over 75 per cent of agricultural output, grew by 5 per cent year on year while cocoa production grew by 14.0 per cent.

According to the report, the Ghana Statistical Service (GSS) attributed agriculture’s underperformance in 2011 largely to “the contraction of the forestry and fishing sectors and a slowdown in crop production’s growth to 3.7 per cent in 2011 from 5.0 per cent in 2010.”

It said Ghana’s economy expanded by a sizeable 14.4 per cent in 2011, its first full year of oil production and continued to exhibit strong growth in first quarter of 2012 when it grew by 8.7 per cent year on year, up from 3.0 per cent year on year a year earlier.

“The double-digit growth in 2011 largely reflects the strong performance of the industrial sector, which grew by 41 per cent in 2011.”

“Aside from the extractive sector (mining and oil production) that propelled growth to over 200 per cent in 2011, manufacturing and construction also demonstrated strong growth of 13 per cent and 20 per cent respectively.”

It said the industrial sector’s performance “is masking the under-performance of some significant non-oil sectors in our view.”

“Strong growth implies scope for further monetary policy tightening however, growth is less-than-stellar outside of industry and oil-related sectors,” it noted.